From 1943 Italy has been classed by the western powers as a 'co-belligerent' rather than an ally, and the postwar territorial adjustments would probably have been much the same if she had remained with Germany until the bitter end. Various Italian possessions on the Adriatic coast are assigned to Yugoslavia. The Dodecanese islands in the Aegean Sea, Italian possessions since 1912, are ceded to Greece. A decision on the future of Trieste is postponed. Italy's African colonies - Libya, Eritrea, Somalia - are placed in trust for the short period until their anticipated independence.
In an Italy shattered and impoverished by the war there is little regret for the end of Mussolini's imperial aspirations. Of greater interest and urgency is the political nature of Italy herself in the coming years.

The king, Victor Emmanuel III, has been closely linked with Mussolini and his now discredited Fascist movement. There is inevitably a republican groundswell against this relatively recent monarchy (not yet 100 years old). A referendum on the issue is scheduled for June 1946. To improve the royalist chances the king abdicates in May in favour of his 41-year-old son, Umberto II.
The result is relatively close but goes in favour of the republicans (in broad terms some 13 million votes for a republic and 11 million for the monarchy, with a very marked division between a monarchist south of the country and a republican north). The king goes into exile after a reign of only a month, and Italy embarks on an uncharted new course.

The Republic of Italy: from 1947

The first essential political task is the election of a Constituent Assembly with the responsibility of drafting a constitution for the new republic. The Christian Democrats, a centre-left party with strong links to the Roman Catholic church, win more than a third of the votes, almost exactly twice as many as the Communists. With their success a long-term pattern is established. Until the 1980s the Christian Democrats will lead every government, with strong support from both the church and the USA, eager in the Cold War climate to keep the Communists out of power.

A constitution is approved in 1947 setting up a parliamentary democracy, with a president as head of state and a prime minister at the helm of what will almost invariably be a coalition government (the inevitable result of fully proportional representation). In the first parliamentary election, in April 1946, the Christian Democrats win almost 50% of the votes. Alcide De Gasperi becomes prime minister. He frequently has to form new coalitions as small parties abandon him, but he contrives to remain in power for eight years at the head of no fewer than seven different governments.

After De Gasperi's final government, in 1953, coalitions and prime ministers follow each other in such rapid succession that the Italian political system becomes one of Europe's standard jokes. The twenty-seven years from 1953 to 1980 see thirty-two different coalitions headed by a fluctuating cast of twelve different members of the Christian Democrat party. Nevertheless, in what seems like an atmosphere of politic chaos, Italy's economy and status in the world prosper greatly from the late 1940s, initially with help from the USA's Marshall Plan, after a period of post-war deprivation.

In 1949 the country becomes one of the twelve founding members of NATO, and in 1957 one of the six founding members of the European Economic Community (now the European Union). During the 1960s the economy grows at more than 5% a year. But at the same time, with the new prosperity benefiting some much more than others and a growing disparity between incomes in the rich north and the poorer south, there is increasing social unrest. The arrival in the north of large numbers of migrants from the south and a slow-down in the economy eventually means that there are fewer jobs for the northerners, leading to a massive wave of strikes in what becomes known as the 'hot autumn' of 1969.

At the same time radical terrorist groups, from both extremes of the political spectrum, begin to proliferate. By far the best-known and most dangerous are the left-wing Red Brigades, formed first in 1970. Their most notorious act of terror is the kidnapping and subsequent murder, after two months in captivity, of Aldo Moro, one of Italy's most successful post-war prime ministers (head of five coalition governments).

The most extreme act of violence by right-wing terrorists during this period is the bombing of the Central Station in Bologna by a neo-fascist organization, the Nuclei Armati Revoluzionari (Armed RevolutionaryNuclei). The bomb explodes in a crowded waiting-room, killing 85 people and wounding more than 200.

The Mafia: from the 19th century

While the new paramilitary terrorist groups bring violence and fear to the streets of Italy, hoping to derive sensational publicity from their exploits, the southern regions of the country after the war are infected by something more secretive and ultimately more pernicious. This is the Mafia, a criminal network preferring to extort money discreetly and quietly but willing to commit violence and even murder in pursuit of its acquisitive aims.

It had developed in Sicily during the 19th century. The abolition in 1812 of ancient feudal powers, ruthlessly enforced by often brutal methods, is followed by a long period of lawlessness, during which an increasing amount of property comes onto the market without proper regulation to enforce legal contracts. These conditions provide an opportunity for criminals to offer their own methods of enforcement and to combine threats of violence with the guarantee of protection at a price. For more efficient exploitation of these opportunities the criminals organize themselves into well-structured groups, the origins of the 'clans' or 'families' within what becomes known as the Mafia. They acquire a presence in many fields of commercial activity in which protection can easily be made a necessity, and above all they establish a foothold in politics.

The Mafiosi have things increasingly their own way until the arrival of Fascism in Italy. In 1925 Mussolini, recognizing a clear rival to his own unscrupulous ambitions, launches a strong campaign against the Mafia, trumping their threats and methods of persecution with a stronger state-backed version of his own. The result is that from then until the end of Fascism in Italy in 1943, after the Allied invasion of Sicily, the Mafia maintains only a tenuous presence in Italian life.

This changes dramatically once the Allies are in control of Sicily. They move with incautious haste to sack Fascists in any position of power. But these people need immediate replacements, in particular as the mayors of cities, and the invading powers know little about Sicilian commercial or political life. It is easy for leading Mafiosi to present themselves genuinely as both anti-Fascist and anti-Communist. As a result many soon find themselves in very useful positions of power. A construction boom, funded by state money after the devastations of the war, provides them with one among many opportunities.

From the 1960s the main threats to the Mafia are self-inflicted, resulting from armed conflicts between clans so violent that they have become known as wars. The First Mafia War (1961-3) prompts the first attempted government response. Nearly 2000 Mafiosi are arrested, but their trials yield few convictions and only light sentences. The Second Mafia War, fought over control of the trade in heroin, is normally dated 1981-3, the period of the greatest violence, but it has started earlier and ends later. Far more people die, mainly in inter-clan feuds, but the victims also include random civilians and precisely targeted pillars of society such as police chiefs, judges and prosecutors engaged in a serious attempt by the state to defeat the Mafia. The war ends with the convincing win of the Corleone clan, having killed all their senior clan rivals. They become, in effect, the Mafia.

Two prosecutors, the close friends Giovanni Falcone and Paolo Borsellino, have been closely involved since the First Mafia War as prosecuting magistrates in the fight against the clans. In spite of the assassinations of several of their colleagues in the second war they continue in their extremely dangerous task. In 1992, within a few months of each other, they are both assassinated on the orders of the chiefs of the Corleone clan. But the state continues its campaign, with major successes in the 1990s.

By this time there are reports of a policy difference within the Corleone leadership. There is a hard-line faction (led by Totó Riina and Leoluca Bagarella) determined to continue the campaign of terrorism against the state, and a reforming group (led by Bernardo Provenzano) which argues that terrorism is counter-productive and that the Mafia should to an extent co-exist with the authorities and concentrate its activities on high-level financial fraud. After the arrests of Riina (1993) and Bagarella (1995), both today still in gaol with multiple life sentences, the approach of Provenzano seems to prevail. Everything is calmer and so far remains so even after the arrest of Provenzano in 2006, who has evaded capture but continued his active role in the Mafia for an astonishing forty-three years after being indictment for murder in 1963. He too is now serving life sentences, for many earlier murders and for his complicity with Riina and Bagarella in the assassinations of Falcone and Borsellino.

Years of Lead and years of Berlusconi years: from the 1970s

The 1970s and 1980s become known as the Years of Lead, paralyzed economically by high unemployment and frequent strikes, and politically by terrorism and corruption. But something of a corner is turned in 1991 when 95% of the electorate vote in a referendum to adopt a constitutional change against the wishes of the political parties. The change is a minor one but it gives the public a new sense of power and leads soon to other reforms, causing the period from the early 1990s to be known informally as Italy's "Second Republic". It is during the years since then that a new politician comes to dominate the political scene. He is Silvio Berlusconi.

Berlusconi is an extremely successful tycoon, having built up a vast financial empire and great personal wealth. By he 1990s he owns a very wide holding in Italia TV and radio, giving him great potential political power. He begins to exercise this in 1994 when he founds a new centre-right political party, Forza Italia. A mere three months later the new party wins a higher number of seats than any of its rivals and Berlusconi sits for the first time in the Chamber of Deputies, already in the role of prime minister His first coalition government lasts only seven months, and is followed by seven years of centre-left government, the most successful of them (1996-98) led by Romano Prodi. But in 2001 Berlusconi regains power and remains prime minister for a full five-year term, the first time this has been achieved in the post-war years. He later wins a third term (2008-10), making him by far Italy's longest-serving prime minister in recent decades.

His has been a most unusual career for a head of state in a functioning democracy. Within his first brief seven-month an investigation is launched into his business empire. It leads eventually to a conviction for fraud and corruption, which is subsequently overturned, but it proves only the first of a large number of times in which he has to mount a defence in the courts. Most of the cases are overturned, usually by statute of limitation (the process being delayed and extended until it exceeds a time limit). Recently both financial and sex scandals have brought him before the courts, with rumours of orgies and call girls.

In October 2012 he was convicted of tax evasion and sentenced to four years in prison, and in June 2013 he was given a seven-year sentence for paying an underage woman for sex and using his powers to attempt a cover-up. In neither case will he go to prison because his age allows him to choose instead either house arrest or community work, but the convictions bring with them a ban on continuing in elected office. His activities have severely tarnished Italian politics and his own international reputation, but a large proportion of the Italian electorate remain firm in their support of him.